Thursday, 22 March 2012

Economists will give the chancellor good marks

Softcapitalist | March 22 11:52am | Permalink

Don't want Mr Osborne to win the Nobel Memorial Prize in Economic Sciences, and the economy to grow below boring Austria's for instance. I want him to be booed by the academics but the median household occupiers to have more purchasing power and a better standard of living: a bigger, cheaper home, a shorter commute, universally affordable education for their children, better health care and less stressful old age. 

The question on income taxation is: what is the effective tax rate for the top 20%, 5%, and for the top 1% of earners? How can the effective rate be progressive, so inequality drops, and social mobility increases in Britain? This is an objective to pursue, to fight for and win a prize for. To achieve that, a progressive tax system on wealth, assets holding and assets transfers, as well as on income needs to take as much as possible from the rich. If they leave they may lower the average income in the UK, but not the median one. And don't tell me the economy will derail because there is not one single study demonstrating how are the 1% of the earners drive this economy. Don't give me the entrepreneurship story, because most of job creation comes from young companies whose owners are not driving Jags. The corporate directors just got better and better paid for doing the same job. The direct and indirect stimulus to the broader economy from the top earners is over-rated and under-researched. 

The captive, defenceless audience are middle income earners and pensioners, and that's where the HMRC pack is going to bite. The biggest losers of yesterday budget are actually the employees making between £40 and £150k as they will either get other benefits reduced so the tax free allowance has no net benefit, or they don't qualify for it anyway. Most of them were not dodging any tax, as they are at HMRC's mercy. The avoiders are the people who didn't pay the 40%, nor the 50%, nor they will pay the 45% rate. They will not move out of Britain, because they are better off from April 2012 onwards. The rest of the taxpayers are supporting those, and even if it is not a matter of absolute numbers in terms of revenue opportunity, it is a matter of conservative, class protective politics. This is the main objective of this government, and it is sad.

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